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Individual with large personal or family due debts cannot hold senior offices in banking institutions

The Administrative Measures for the Qualifications of Directors and Senior Officers of Financial Institutions in the Banking Sector (the “Measures”), effective as of 18 December 2013, provides that if the proposed and incumbent directors and senior officers of financial institutions or his/her spouse fail to repay large amount of due debt, including but not limited to the due loan in that financial institution, he/she will be not eligible for holding such positions.

In addition, the Measures also provides that, if the proposed and incumbent directors and senior officers of financial institutions, together with her/his close relatives (or the entities under his/her control), jointly hold over 5% of the shares of that financial institution (or he/she or his/her spouse is working for an entity holding over 5% of the shares of that financial institution), and the credit line these individuals or entities acquire from the financial institution significantly exceeds the net value of the equities they hold in that financial institution, he/she will be not eligible for holding such offices, either.

KWM Comments: The Measures sets forth new conditions for the eligibility of the proposed and incumbent directors and senior officers of financial institutions, i.e. the financial stability and independence. The Measures further makes detailed interpretation on such new conditions. This may facilitate establishing a well-running administrative system on the qualification of officers in financial institutions.

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